Correlation Between American Beacon and Fidelity Equity
Can any of the company-specific risk be diversified away by investing in both American Beacon and Fidelity Equity at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining American Beacon and Fidelity Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Large and Fidelity Equity Dividend, you can compare the effects of market volatilities on American Beacon and Fidelity Equity and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in American Beacon with a short position of Fidelity Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Fidelity Equity.
Diversification Opportunities for American Beacon and Fidelity Equity
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Fidelity is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Large and Fidelity Equity Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Equity Dividend and American Beacon is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on American Beacon Large are associated (or correlated) with Fidelity Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Equity Dividend has no effect on the direction of American Beacon i.e., American Beacon and Fidelity Equity go up and down completely randomly.
Pair Corralation between American Beacon and Fidelity Equity
Assuming the 90 days horizon American Beacon Large is expected to generate 1.05 times more return on investment than Fidelity Equity. However, American Beacon is 1.05 times more volatile than Fidelity Equity Dividend. It trades about 0.07 of its potential returns per unit of risk. Fidelity Equity Dividend is currently generating about 0.06 per unit of risk. If you would invest 2,441 in American Beacon Large on January 24, 2024 and sell it today you would earn a total of 223.00 from holding American Beacon Large or generate 9.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Large vs. Fidelity Equity Dividend
Performance |
| Timeline |
| American Beacon Large |
| Fidelity Equity Dividend |
American Beacon and Fidelity Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Fidelity Equity
The main advantage of trading using opposite American Beacon and Fidelity Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Fidelity Equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Fidelity Equity will offset losses from the drop in Fidelity Equity's long position.| American Beacon vs. American Beacon Ssi | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Twentyfour | American Beacon vs. American Beacon Twentyfour |
| Fidelity Equity vs. Fidelity Municipal Income | Fidelity Equity vs. Fidelity Advisor Health | Fidelity Equity vs. Fidelity Capital Income | Fidelity Equity vs. Fidelity Freedom 2040 |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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